Case Studies in Social Innovation: ReStore

It’s common for retailers to have in stock high-quality items that, for different reasons, can no longer be sold in their stores. Individuals are also often in possession of otherwise usable items they no longer need. Typically these products end up in landfills. At the same time, the non-profit organization Habitat for Humanity has to manage the challenge of covering its administrative costs, although it would rather direct each penny it raises toward its central purpose: home building. How does one solve each issue in an innovative and efficient way?

Reducing waste and covering administrative costs

To address these situations, Habitat for Humanity’s ReStore was born close to 20 years ago. Its mission is to reduce waste and cover administrative costs more effectively. The concept originated with the plan to sell donated materials that were not used in the building of Habitat houses, explains Rob Voisin, Director of ReStore Services in Canada. From there the idea evolved into a store that accepted all building materials that were saleable from both individual and business donors.

ReStore today is essentially a retail store that accepts donations of overstocked or salvageable building materials, as well as seconds and used or discontinued items donated by manufacturers, stores, contractors and individuals. Acceptable items vary, and include goods such as new and gently used furniture, construction materials, appliances, cabinetry, sinks, countertops, and household and décor items. “Our stores have started to accept and sell significantly more furniture, appliances and home décor,” Voisin says, adding, “These have become some of our most significant sales categories.”

ReStore sells the donated items to the public at a reduced cost (usually 50% to 80% off the original retail value). Donors receive a tax receipt for the value of their donated item. And the profit generated by ReStore is used to fund the local Habitat affiliate that operates the store, fully covering the administrative costs of each. Any money raised conventionally—whether through individual or corporate giving—is directed toward local builds, enabling Habitat for Humanity to fulfill its core mission: giving local low-income families safe, decent and affordable housing.

Shopping at and donating to ReStores is not only a socially conscious decision, but it is an environmentally friendly one too. Since 1998, ReStores across Canada diverted approximately 134,000 metric tons of waste material from landfills, with 21,800 tons diverted in 2011 alone. In the Greater Toronto Area (GTA), 1,500 metric tons of waste were diverted thanks to the five ReStore outlets in the region, says Rob Lee, Vice President, ReStore Operations in Toronto.

There are currently 76 Canadian ReStore locations, with another eight to ten projected to open in 2013. Over half (46) are in Ontario, with five in the GTA. Each is operated independently and boasts a unique, ever-changing inventory thanks to daily residential and business donors. Lee explains that each ReStore in his region is staffed 90% by volunteers, a model that saves the organization over $420,000 in salaries each year.

Additionally, in partnership with the Ontario Electronic Stewardship program, select ReStores in Ontario offer eco-friendly ways to recycle over 185 different appliances and electronics.

Challenges and projections for growth

“The greatest challenge is our limited resources for growth,” offers Voisin. Most ReStores have the sales capacity to grow their store, he explains, and those who have been able to relocate, renovate or open a second store have experienced significant sales growth. But, he adds, “With most of our stores being run 90% by volunteers, we are constrained both by workforce and by finances.”

For Lee, the greatest obstacle is the constant procurement of products. “Getting customers is not as hard as getting products,” he relates. Nevertheless, retail locations under his purview continue to grow.

While many great partnerships are helping ReStore achieve its success, the one with Home Depot is fundamental. When circumstances allow, Home Depot has contributed all of their returns of vendor products from their retail locations as well as large donations from their distribution locations.

In 2012, Habitat for Humanity Canada procured and distributed over $4.5 million in donated products for ReStores to sell, bringing national sales to roughly $38 million for the year. The organization is exploring the opportunity to run a similar operation in Western Canada, likely in the Greater Vancouver area, a move that could effectively turn their national program into an $8 to $10 million procurement program, with still room for significant growth across Canada.